When it comes to attracting universal revulsion within a business organisation, performance reviews have few equals. Employees dislike it because of the potential for negative feedback, while if you are a business owner or manager, being the bearer of unpleasant news can be an awkward experience.
To their credit, though, performance reviews are an excellent tool to keep your employees focused and productive. They don't have to be negative, either – a well-conducted employee performance review is the ideal platform to celebrate past successes and plan for future ones.
How to Conduct a Performance Review
Since they are so unavoidable, your focus as a business owner should be to make them as efficient and tolerable as possible for all concerned, including yourself. By following these simple steps, you can ensure a smooth and professional experience for everyone:
1. Hold Reviews and Appraisals More Frequently
If you want your employees to be more receptive towards feedback, you have to take steps to instil a culture of frequent or ongoing appraisals. Quarterly or even monthly evaluations can have a significant positive impact on your employees.
Of course, it is always appropriate to hold a more comprehensive annual review to assess the achievements and career trajectory of your employees. You can use these to decide on important issues, such as promotions and raises.
In the meantime, however, try to hold frequent appraisals that focus on areas for improvement. Accumulating negative feedback over a long time and letting it out all in one go will not only be an unpleasant experience for your employee, but it will also mean that their growth and capacity to improve will stagnate the longer it goes on.
Giving prompt feedback through periodic reviews is less painful - and more beneficial - for everyone. It will enable you to correct behaviours where necessary, and help keep your communication lines active: both critical factors in the long term health of your organisation.
2. Pick the Right Time for Your Appraisal
When holding your main annual performance review, the timing is crucial. You have to allocate enough time for all your employees, which can be challenging during normal circumstances; it can be next to impossible if your business has peak seasons.
Obviously, you should avoid holding reviews during those peak times. It is natural for employees to feel intimidated by these appraisals, but if you conduct them during high-stress periods, it can take a concerning toll on your organisation's morale.
3. Prepare Your Evaluation Well in Advance
The worst thing you can do during a performance review is to walk into it totally unprepared. Do not make the mistake of doing your evaluation on the fly during the review meeting; keep notes and prepare your assessment for each employee in advance if you want your reviews to yield anything productive.
Setting a specific agenda for each employee could be a sensible move here. If you perform regular reviews as suggested above, you will have pretty in-depth knowledge about the contributions and weaknesses of each employee.
You can then use that information to set the tone for each employee appraisal. Do you want to focus more on the positives and offer encouragement? Or do you want to request improvements within certain spheres? If you're unprepared and can't identify the strengths and weaknesses of your employees, then the entire process will become a waste of time.
4. Address the Right Points
A comprehensive review should cover all the significant aspects of your employee's performance within the organisation. These are some of the essential points you need to address during annual performance reviews:
- Punctuality and reliability
- The overall quality of work, compliance with standards
- Performance within a team/group
- Initiative, innovation, and leadership potential
- Personal improvement and training
Depending on the individual employee's drawbacks or strengths, you may want to focus more on any one of these aspects for your review.
5. Communicate the Agenda and Goals to Your Employee
Ambushing your employee with a surprise review does not serve any practical purpose. Instead, it is much better to set a meeting well in advance while intimating the tone and importance of the evaluation.
This approach has several advantages. It will give the employee some time to prepare their own thoughts and feelings; after all, a performance review is supposed to be a dialogue between the manager and the employee - not a one-way monologue.
It is good practice to give them a copy of their appraisal form in advance, too. This will remove a large part of the emotional edge from the whole exercise, and give your employee time to come to terms with the contents of the review - especially if they have been performing poorly.
You can even ask the employee to do a self-review in advance. By adopting this approach, both parties can glean new insights by comparing their perspectives on the performance of the employee.
6. Make Liberal Use of Documents and Notes
When conducting your review, you should always try to base your opinions on incidents that you have personally witnessed; this is why keeping notes on your employees throughout the year is highly recommended. Having documentary proof of your assertions will always make them more authentic and forceful.
Those records will help provide you with a clear idea about the performance of that employee, too; never depend entirely on your memory as later events can taint them. Besides, by backing everything up with notes and records, the entire process becomes a lot more professional and credible, making it more difficult for your employee to question your judgement.
7. Focus on Future Plans
Ultimately, the main aim of a performance review is to create a mutual understanding between yourself and the employee regarding your shared future in the organisation. There is no point in showering criticism for past mistakes if you cannot set clear objectives for the future.
Hold frank discussions regarding the plans of your organisation, and the potential role your employee will play in it. In itself, this is an excellent opportunity to set objectives for both parties; the list doesn't have to be long or exhaustive - it just has to be realistic and practical.
For your employee, it could be something as simple as acquiring a new skill set or improving certain aspects of their performance, while from your side, you could commit to a raise or a performance bonus for a specific target.
Of course, nobody likes to receive criticism - this is a simple truth of human nature and ego. As long as our brains are wired in this way, performance reviews will continue to challenge employees and employers alike. However, by following these steps and committing to a process of careful planning, you can at least make sure that there is a positive outcome - not just for your employee, but for your business as a whole.
Alternatively, you can let Starting Business do the work for you. We offer performance review templates for both new (post-probation) and long-term employees, meaning that all you have to do is follow what is detailed on the sheet!
What other advice would you give for conducting employee performance reviews? Let us know in the comment section below.